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Residential rents in England and Wales rise for first time for several months
Rents in England and Wales increased by 0.1% between January and February, the first monthly rent since autumn 2015, according to the latest index. This took the average rent to £791 a month and could be the first of several rises as the private rented sector braces for anti-landlord policies such as tax changes. The data from the buy to let index from Your Move and Reeds Rains also shows that year on year rents are up 3.3%, or an extra £25 a month for the average tenant. Average rents are now rising on a monthly basis for the first time since September 2015, up 0.1% between January and February. Rents across England & Wales now stand at £791 per month as of February, 3.3% higher compared to this point last year – or an extra £25 per month for the average tenant. On a regional basis rent rises were led by the Midlands. In the East Midlands tenants have seen the fastest annual rent rises, up 7% over the last 12 months. This is followed by the West Midlands with 6.3% and the East of England with rents 6.2% higher than in February 2015. These three regions all stand ahead of London on this basis, with rents in the capital 4.8% higher than 12 months ago. As recently as November, London consistently led the field in terms of annual rent rises. Meanwhile, at the other end of the spectrum rents are lower than a year ago in three out of 10 regions. These exceptions are led by the North East where the average rent is now 2.5% lower than in February 2015, followed by Wales with rents down 1.5%, and the South East with a marginal 0.1% annual drop. Five out of 10 regions have now seen rents rising month on month. On this basis the East of England leads with rents in February 1.1% higher than in January 2016. The South East and the East Midlands are joint second on this measure with rents up 0.6% between January and February. By contrast, rents in Wales and the North East are now 0.9% lower and 0.7% lower than in January, respectively. On the back of the latest monthly increases, monthly rents in the West Midlands have set a new an all-time record high, at £596, alongside a new all-time record for Yorkshire and Humber rents at £559. The East Midlands, while home to the fastest annual rent rises in the twelve months to February, has seen rents remain just £1 short of the all-time record high set at £610 in November 2015. Adrian Gill, director of lettings agents Your Move and Reeds Rains, pointed out that rents are rising at a time when demand is growing. ‘Rent rises could now accelerate further. If government attacks on landlords bite, having worsened again in this week’s Budget, the flow of investment… Continue reading
More details of UK buy to let extra stamp duty charge revealed
Details of how the new stamp duty surcharge on additional homes in the UK have now been provided by the Treasury following Chancellor George Osbourne’s Budget speech. From 01 April anyone buying an additional property, whether as a second home or a buy to let investment will pay an extra 3% in stamp duty. Sales completes before midnight on 31 March 2016 will not be liable for the extra charge and transactions where contracts were exchanged before 25 November 2015 will not be liable, even if completion takes part on or after 01 April. It means stamp duty for an additional home worth up to £125,000 will be charged at 3% whereas before it was zero. Properties sold at £125,000 to £250,000 will be subject to 5% charge, up from 2%. Those prices £250,000 to £925,000 8%, previously 5%, from £925,000 to £1.5 million a rise to 13% and those over that a 15% charge. The time limit for those who own two properties temporarily because they could not sell their main residence before buying another main residence has been extended from 18 to 36 months This means those who buy a new main residence without have sold their previous one will pay the additional stamp duty, but if they sell their previous residence within 36 months, they can claim a refund. Owners of multiple properties will also have 36 months to replace their main residence without incurring the extra 3% charge. The 36 month period will begin from 25 November 2015 for purchasers who disposed of their previous main residence prior to the Autumn Statement where the extra charge was announced. Couples who are separated will be treated as ‘separate entities’ in terms of property ownership. ‘The government will not treat married couples as one unit if they are separated in circumstances that are likely to be permanent,’ the Treasury document says. As announced by Osbourne on Wednesday large scale buy to let investors will be liable for the additional charge. This is despite the Chancellor initially saying that those buying more than 15 properties would be exempt. Buyers will declare their status as existing property owners or not when filling in the Stamp Duty paperwork on the purchase of a property. The Chancellor expects the additional 3% duty to raise £3.7 billion for the Treasury over the next five years. Continue reading
Mortgage lending in UK fell in February month on month, no big change expected
Gross mortgage lending reached £17.6 billion in February, some 5% lower than January but 30% higher than February last year, according to the latest estimates from the Council of Mortgage Lenders. It is, however, the highest lending total for a February since 2008 when gross lending reached £24.1 billion. ‘Lending continues the year on a positive note, with our monthly estimate showing an increase of 30% in February compared to a year ago. This growth rate is in line with what we saw in the closing months of 2015,’ said CML economist Mohammad Jamei. He explained that the recovery is being underpinned by market fundamentals in the UK, as wages grow and unemployment falls, helped by government schemes and competitive mortgage deals but the CML thinks it is unlikely that there will be any significant acceleration in lending. ‘While there may be a slight current boost to lending as some transactions seek to complete before the 01 April tax changes in the buy to let sector, this is likely to be followed by a slight fall in activity. Affordability pressures continue to weigh on activity, as does the low number of properties coming on the market, though this has been improving very recently,’ he added. Andy Knee, chief executive of LMS, believes that apart from a slight dip in activity expected following the April tax changes, all factors are working in the mortgage market’s favour. ‘Despite a delay in the base rate rise, the remortgage market in particular is likely to continue unabated, with home owners sitting on record housing equity and capitalising on the hugely competitive rates currently available,’ he pointed out. According to Peter Rollings, chief executive officer of Marsh & Parsons, once the April deadline passes it will quickly revert to business as usual, and a subsidence in buy to let borrowing will likely water down the growth in the mortgage market. ‘The Chancellor is certainly laying the long-term foundations for future mortgage lending levels, with the Lifetime ISA announcement just the latest guise to help first time buyers save up for a deposit and get onto the property ladder,’ he said. ‘But these savers are a long way down the pipeline, and in the immediate term, borrowing is more likely to feel the brunt of measures affecting the buy to let market. Property investors were completely overlooked in the Budget, and the Chancellor’s move to exclude landlords from the tax break on capital gains seems at odds with the need for greater supply of property on the market. Any measure that discourages and disincentives selling homes is not helpful in the current climate, and for buyers trying to keep track of house prices,’ he added. Continue reading
